EC launches liner shipping investigation

The European Commission said it has “opened formal antitrust proceedings against several container liner shipping companies to investigate whether they engaged in concerted practices, in breach of EU antitrust rules.
“Since 2009, these companies have been making regular public announcements of price increase intentions through press releases on their websites and in the specialized trade press. These announcements are made several times a year and contain the amount of increase and the date of implementation, which is generally similar for all announcing companies. The announcements are usually made by the companies successively a few weeks before the announced implementation date,” the EC said.
“The commission has concerns," it continued, "that this practice may allow the companies to signal future price intentions to each other and may harm competition and customers by raising prices on the market for container liner shipping transport services on routes to and from Europe.”
It said it would investigate “whether this behavior amounts to a concerted practice in breach of Article 101 of the Treaty on the Functioning of the European Union (TFEU) and of Article 53 of the European Economic Area (EEA) Agreement."
Trevor Soames, a partner at the law firm Shearman & Sterling in Brussels who represented the European Liner Affairs Association in the Commission's review of the liner conference block exemption, said that the case was a novel “price signaling” case that follows a cartel investigation by EC Competition authorities that was launched in May 2011 with dawn raids of a number of liner companies.
“It would seem that the commission has come up with no evidence of any cartel-type collusion and wishes to use this case to push the boundaries of antitrust enforcement into an area where there is no supporting case law: Pure price signalling without any form of collusive behaviour will be very difficult to establish as an infringement due to the binding Woodpulp case law," he said. He continued, "In the Woodpulp judgment of 1993, which is the leading case, the European Court held that, of itself, parallel pricing behavior without collusion cannot be an infringement unless collusion constitutes the only plausible explanation for such conduct."
Soames said, “Although this is a liner shipping case, this case has a much wider importance as a potential precedent way beyond liner shipping.”
The investigation comes at a time when EC is examining plans by Maersk, MSC and CMA CGM to form the P3 Network.
While the announcement today did not reference the P3, if the Competition Directorate is alleging competition on the Asia-Europe trade is being reduced by price signaling, they might assess that alliance against the background of their belief that competition is being reduced on the Asia-Europe trade through price signalling, and may seek to trade off the cases leveraging one against the other.
While the comission did not give any examples of price increase announcements, American Shipper found, for example, that Maersk, MSC, CMA CGM and Hapag-Lloyd have all, between Nov. 12 and Nov. 19, announced increases of $750 or $775 per TEU to go into effect on Dec. 15 or Dec. 16. (Other carriers have also announced increases, and the announcements by the carriers do differ in other ways, such as the countries they include.)